Corporation tax is a key financial obligation for limited companies operating in the UK. For accounting firms, mastering the corporation tax return process (CT600) is vital not only for regulatory compliance but also for providing exceptional service to clients. This comprehensive guide will walk you through the ins and outs of corporation tax returns from filing deadlines to common pitfalls helping your firm stay ahead.
What is a Corporation Tax Return?
A Corporation Tax Return, submitted via form CT600 is a mandatory report that UK companies must file with HMRC, detailing their income, expenses, and resulting corporation tax liability. It includes financial statements and tax computations and must reflect accurate data that aligns with the company’s accounting records.
Corporation tax applies to:
- Limited companies
- Foreign companies with UK branches or offices
- Clubs, societies, and co-operatives
The current corporation tax rate for most businesses as of April 2025 is 25% (or 19% for companies with profits under £50,000 via the small profits rate).
Key Deadlines and Requirements
Filing Deadlines:
- The corporation tax return must be filed 12 months after the end of the company’s accounting period.
- The tax payment is due 9 months and 1 day after the conclusion of the accounting period.
This often causes confusion among clients — they must pay before they file! It’s crucial for accounting firms to ensure timely reminders and proactive tax planning.
What Must Be Included in a CT600 Filing:
- From CT600 (Corporation Tax Return)
- Company accounts (iXBRL tagged format)
- Tax computations (also iXBRL)
- Any relevant supplementary pages (e.g., for R&D claims, capital allowances)
Everything must be filed online via HMRC’s portal or compatible accounting software.
Step-by-Step: Filing a Corporation Tax Return
1. Register for Corporation Tax
If your client is newly incorporated, registering with HMRC is the first step. This should be done within three months of starting to trade.
2. Prepare Annual Accounts
Ensure your client’s statutory accounts are accurate and compliant with UK accounting standards (FRS 102, FRS 105, or IFRS depending on the company).
3. Calculate Taxable Profit
Start with the company’s pre-tax profit and adjust for:
- Non-deductible expenses
- Capital allowances on equipment
- R&D tax relief or other allowances
- Losses carried forward or back
4. Complete and Tag Documents
Utilize iXBRL tagging software to accurately tag accounts and tax calculations. This allows HMRC’s systems to read and process submissions efficiently.
5. File Online
Log into HMRC’s corporation tax portal or use approved accounting software to submit the CT600 and attachments.
Common Mistakes and How to Avoid Them
1. Late Filing or Payment These trigger automatic penalties starting at £100. Repeat offenses increase the amount and can lead to interest on unpaid tax.
2. Incorrect iXBRL Tagging Poor tagging can cause HMRC rejections or audits. Investing in good software or outsourcing to a specialist tagging service can prevent this.
3. Mis claiming Reliefs Whether It’s R&D tax credits or Annual Investment Allowance, be cautious and accurate in applying reliefs. Mis claims can delay refunds and trigger inquiries.
4. Overlooking Group Companies If your client is part of a group, consider group relief, transfer pricing implications, and whether joint or separate filings are appropriate.
Tips for Accounting Firms
Automate Where Possible
Use modern software to automate tax computations, tagging, and submission. This streamlines processes, minimizes human error, and guarantees compliance.
Set Up a Tax Calendar
Create an internal calendar with alerts for key dates not just for filing but for preparatory milestones like data gathering and review stages.
Review of Clients’ Financials Quarterly
Waiting until year-end can cause surprises. Reviewing financial performance every quarter helps with tax planning and estimating liabilities accurately.
Offer Pre-Year-End Planning
Help clients reduce liabilities through legal tax strategies like pension contributions, capital asset purchases, or R&D claim preparations.
Stay Updated on Legislation
Corporation tax rules evolve. Stay informed by subscribing to HMRC bulletins, participating in CPD webinars, and joining accounting forums.
Recent Changes to Corporation Tax (As of 2025)
- The main rate remains at 25%.
- Marginal Relief is available for companies whose profits range from £50,000 to £250,000.
- Full Expensing (100% capital allowances) continues for qualifying plant and machinery investments.
- The R&D regime has been consolidated, with tighter rules on overseas spending.
Firms should ensure their clients are aware of how these changes affect future planning and current-year liabilities.
Dealing with HMRC Inquiries
Occasionally, HMRC may investigate a CT600 return. Here’s how to prepare:
- Keep detailed working papers and documentation.
- Ensure calculations are transparent and well-referenced.
- Respond professionally and within deadlines.
Professional indemnity insurance often covers the costs of dealing with tax investigations, a good upsell for clients.
How to Grow Your Firm’s CT600 Offering
Bundle services like bookkeeping, year-end accounts, and corporation tax into fixed-fee packages.
Market expertise through webinars, newsletters, or blog posts (like this one!) to build trust and attract new clients.
Use tech tools to provide better experiences, for example, digital document signing, cloud accounting, and client dashboards.
Conclusion
Filing a corporation tax return isn’t just a compliance exercise, it’s an opportunity to add value, save clients’ money, and deepen trust. By mastering the process and staying ahead of legislation, accounting firms can position themselves as proactive, indispensable advisors. As the UK tax landscape continues to evolve, firms that blend technical expertise with automation and client education will thrive.
